Demand based pricing, Marketing Management

Assignment Help:

Demand Based Pricing: Described methods belong to the category of demand / market based pricing:-

1. What the Traffic can Bear' Pricing

2. Skimming Pricing

3. Penetration Pricing

  • What the Traffic can Bear' Pricing: The seller takes the maximum price that the customers are eager to pay for the product under the given circumstances. This technique is used more by retail traders and than by manufacturing firms. This method brings big profits in the short term objective. But in the long run it is not a safe concept; chances of errors in judgment are very high.
  • Skimming Pricing:This method aims at high profits & high price in the early stage of marketing the product. It gainfully taps the opportunity for selling at high prices to those segments of the market, which do not bother much regarding the price. This particular method is very useful in the pricing of new products, especially those that have a luxury or specialty elements.
  • Penetration Pricing: Penetration pricing seeks to gain greater market penetration throughout relatively low price. This method is also helpful in pricing of new products under definite circumstances. For instance :when the new product is capable of bringing in large volume of sales, but it is not a luxury item and there is no affluent / price insensitive segment, the firm can select the penetration pricing and make large size sales at a reasonable price before competitors enter the market having a similar product. Penetration pricing in such type of cases will help the firm have a good coverage of the market and keep competition out for some time.

The price elasticity of demand is taken into account in all of the demand based pricing methods, indirectly or directly. Price elasticity of demand refers to the relative sensitivity of demand for a product to changes in its value in other words how significantly the sales of the product are affected when price is changed. If decrease or increase in the price of the product results in significant increase or decrease the product is said to be price elastic conversely, if price change does not considerably affect the sales volume, a product is called to be price inelastic.


Related Discussions:- Demand based pricing

Brand policies and strategies adapted by the manufactures, Brand policies a...

Brand policies and strategies adapted by the manufactures: Marketing under the own brand of manufacturer: under the policies and strategies the manufacturer sales all his pro

Explain with examples the meaning of shadow branding, Question: (a) Ex...

Question: (a) Explain with examples the meaning of shadow branding? (b) What is the difference between umbrella branding and portfolio branding? (c) List the six market

State the term premium pricing briefly, State the term Premium Pricing brie...

State the term Premium Pricing briefly? Premium Pricing: This price strategy applied to various version of to similar product. It is a better version and a fundamental or

What is related product diversification, What is related product diversific...

What is related product diversification? A company may diversity through broadening its product line in associated products or unrelated products or might both in associated as

Polynomial function, For 1980 through 1996 e total exports E of the us can ...

For 1980 through 1996 e total exports E of the us can be modeled by E=-0.131^3 +5.033t^2-23.2t+233 where t is the number of years since 1980 in what year were the total exports abo

What are the tools of marketing in words of mccarthy, What are the tools of...

What are the tools of marketing in words of McCarthy? McCarthy classified such tools in four broad groups, that he called the four Ps of marketing: Price place, Produ

Describe influences on consumer behaviour, Question 1: (a) What are th...

Question 1: (a) What are the different stages in consumer buying decision? (b) Explain the difference between routine and complex buying decision using appropriate exampl

Assertive confrontation message to an employee, Question (a) When deli...

Question (a) When delivering an assertive confrontation message to an employee, you have to be careful not to become defensive or reactive if the employee becomes argumentati

What is total customer satisfaction, Question 1: (a) Explain the import...

Question 1: (a) Explain the importance of the theories of motivation in helping marketing practitioners understand why people buy? (b) (b) Is Customer loyalty synonymo

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd